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Marizza181 [45]
3 years ago
10

The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save mo

ney. The net cost of this machine is $72,000. The annual cash flows have the following projections. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 29,000 2 33,000 3 35,000 4 21,000 5 18,000 a. If the cost of capital is 12 percent, what is the net present value of selecting a new machine? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Net present value $ b. What is the internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal rate of return % c. Should the project be accepted?

Business
1 answer:
lys-0071 [83]3 years ago
6 0

Answer:

IRR= R1+[NPV1(R2-R1)%/(NPV1-NPV2)]

      =28%+[ 549 x (29-28)%/(549-(-763)]

       =28% +[5.49/1312]

         =28% +0.418

          =28.41%

As per both NPV and IRR the project is acceptable

Reason:

NPV is positive and IRR is greater than cost of capital

Explanation:

See the attached pictures for detailed explanation.

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<em>A misstatement </em>is a false or incorrect statement. So a material misstatement is a significant statement that is false or incorrect. In the context of a financial audit, a material misstatement is untrue information in a financial statement that could affect the financial decisions of one who relies on the statement.

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Samsonite has declared a 90% stock dividend. At the time of the declaration, Samsonite's stock was selling for $250 per share. I
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$131.58

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The computation of the new stock price is shown below:

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Data provided in the question

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